Munich Personal RePEc Archive

Tourism: The Great Patient of

Coronavirus COVID-2019

Folinas, Sotiris and Metaxas, Theodore

University of Thessaly

16 March 2020

Online at https://mpra.ub.uni-muenchen.de/103515/

MPRA Paper No. 103515, posted 21 Oct 2020 06:46 UTC

‘Tourism: The Great Patient of Coronavirus COVID-2019’

Sotiris FOLINAS1 and Theodore METAXAS2

1 PhD Candidate, Dept. of Planning and Regional Development, School of Engineering, University of Thessaly, Greece.

E-mail: sfolinas@uth.gr

2Associate Professor, Dept. of Economics, School of Economics and Business,

University of Thessaly

E-mail: metaxas@econ.uth.gr

Abstract

The purpose of this paper is to investigate the extent to which an epidemic such as 2019-nCoV can

affect the global tourism industry and the recording of the first estimates of the damage to world

tourism. Countries such as China, where the epidemic began, but also Italy, where new cases are

constantly being reported, are no longer tourist destinations. Potential tourists tend to postpone or

cancel their plans for a destination that is plagued by a pandemic, especially when its main features

are scarce of effective antivirus drugs and vaccines, the rapid spread of the virus and the damage that

can cause to health (Reisinger & Mavondo, 2005). In cases of pandemics, tourists cancel their travels

avoiding suspect places and people (Nicholl, 2006). Such kinds of pandemics affect directly industries

such as tourism and retail service sector (Lee & McKibbin, 2004). The economic consequences of this

outbreak will be serious and they will cause damages not only to the tourist destinations with an

important concentration of cases but also at a global level. A similar case is the outbreak of SARS in

2002 (Chou et al, 2003; Siu & Wong, 2003; Wen, 2003). Tourism is currently –March 2020- one of

the most affected sectors and the World Tourism Organization has revised its 2020 forecast for

international arrivals and receipts, though it emphasizes that such predictions are likely to be further

revised (UNWTO, 2020). The United Nations specialized agency for tourism expects that

international tourist arrivals will be down by 20% to 30% in 2020 when compared with 2019 figures.

An expected fall of between 20-30% could translate into a decline in international tourism receipts

(exports) of between US$300-450 billion, almost one-third of the US$ 1.5 trillion generated in 2019.

Taking into account past market trends, this would mean that between five and seven years’ worth of

growth will be lost to COVID-19 (UNWTO, 2020).

Keywords

Coronavirus COVID-2019, Tourism, Economic Impact.

Limitations

As the phenomenon being studied is ongoing, most of the references come from the mass media and

not from scientific articles published in journals, because there are not yet a significant number of

papers about the impact of coronavirus on global tourism.

Introduction

The rapid spread of novel coronavirus (2019-nCoV), since the first case occurred in December 2019

in Wuhan, Mainland China, led to a significant reduction in almost all global tourism (Estrada et al,

2020). Chinese health authorities have been closely monitoring a cluster of pneumonia cases in the

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city of Wuhan, in Hubei province. It has been determined that the pathogen causing viral pneumonia

among affected individuals is a new coronavirus (2019-nCoV). As since February 2020, a total of

more than thirty thousand cases have been detected and confirmed in Mainland China (Chinazzi et al,

2020). Internationally, there are more than 200 additional cases detected and confirmed in 160

countries. The epidemic is reaching an alarming new milestone, driven by new cases outside China as

governments further tighten restrictions. Already in the early March 2020 coronavirus surpassed

1,400,000 cases (Worldometers, 2020). Predicting and comprehending travelers’ behavior is the main

issue for tourism marketers, particularly when exists a certain obstacle for traveling like a pandemic

(Lee et al, 2012).

The spread of the virus has particularly focused attention on the globalised nature of international

tourism and how the sector may be affected by the spread of the virus. The growth of international

tourism has been one of the enduring and most significant forces driving the world economy since the

1950s. From a mere 25 million international tourism arrivals in 1950, the numbers reached 450

million in 1990 and then quickly exploded to 1 billion arrivals by 2010. By 2018, the number of

arrivals had increased to 1.4 billion and is estimated by the United Nations World Tourism

Organization to account for $1.4 trillion and 7% of the value of world goods and services (RTE,

2020).

Picture 1: More than 160 countries with confirmed Coronavirus COVID-19 cases

Source: Centers of Disease Control and Prevention (2020)

This phenomenal growth has been driven by various factors over the years, most particularly the

growth of new technologies, new lifestyle trends associated with growing global prosperity and the

advent of low cost airlines, which made international travel affordable for the masses. The explosion

of tourism numbers over the last 30 years can also be attributed to the emergence of the middle

classes in the newly affluent and highly populated countries of the world such as China, Brazil and

India (RTE, 2020). The movement of such a massive number of people and the associated expenditure

of such tourists (for leisure and business purposes) has a profound impact on national, regional and

local economies across the world. Moreover, tourism activity often happens in places that industry

finds unattractive as a location for investment. Spending by visitors on sporting and cultural events,

shopping, accommodation, restaurants, visitor attractions and as business visitors at conferences,

provides a massive stimulus to local economies and employment.

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Figure 1: Countries coronavirus cases distribution

Source: Worldometers (2020)

The consequences of pandemics on tourism.

The worldwide caution that surrounds the 2019-nCoV outbreak stems from international apprehension

of a previous global catastrophe such as the Spanish Influenza pandemic at the end of the second

decade of 20th century or of an economic shock like the 2003 SARS (Severe Acute Respiratory

Syndrome) coronavirus epidemic (Lee et al, 2012). In March 2009, unknown influenza appeared in

Mexico and in April of the same year, under international health protocols the Mexican government

reported this to the Pan-American Health Organization as an outbreak of a novel influenza type virus

(Neumann et al, 2009). Subsequently, the United States CDC (Centers for Disease Control and

Prevention) identified the virus as a new strain of Influenza A H1N1 (Jeeninga et al, 2009) now

known as 2009 H1N1. In the next six months, the number of people infected by 2009 H1N1 rapidly

increased globally, and the World Health Organization quickly increased the pandemic alert for 2009

H1N1 to the high phase six-level (Lee et al, 2012). Symptoms of 2009 H1N1, including sore throat,

runny nose, cough, and high fever are similar to seasonal influenzas as are the inter-person infection

paths. Scientific community worries about it being a critical virus that could mutate into a virulent

deadly form, like the Influenza A H1N1 that swept Europe in the 1920s (Jeeninga et al, 2009).

According to recent estimates (Kolata, 2001), the lethal strain of influenza, known as the ‘Spanish

Flu’, killed up to 100 million people between 1918 and 1920.

As reported by St. Michael’s Hospital (Khan et al, 2009), a dangerous epidemic can spread very

rapidly around the world by the air transportations sector, which moves more than two billion

passengers each year, using a network of 35,000 commercial airline connections among commercial

airports in close to 3500 cities. Since early February 2020, more than fifty airline companies

suspended or limited flights to China and several countries including Italy, Australia, Russia, and the

USA, and have also imposed government-issued travel restrictions (Chinazzi et al ,2020).

Impact of Coronavirus 2019 on China’s Tourism Industry.

As China was the first country that has been hit by the coronavirus, it was also the first country that

has faced the first economic downturns. Tourism is perhaps the main industry that would be

negatively impacted (Ayittei et al, 2020). In Mainland China about 70,000 theatres closed down, the

majority of airlines canceled or canceling flight to and from China, all tourism activities have been

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disrupted and coronavirus’s impact on the economy already extends beyond the Hubei region borders.

Quite obvious is also an impact in the rattled stock market, as, during the SARS outbreak from 2002

to 2003 in China, the global economy was estimated that has lost roughly $40 billion (NBC News,

2020). According to estimated modeling by Bloomberg economists, who had analyzed the expected

losses to several countries, the global GDP is likely to decline by roughly 0.42% in the first quarter of

the year due to the outbreak (Ayittei et al, 2020). The tourism industry currently accounts for 10% of

global GDP (World Economic Forum, 2020).

In addition, China is the single largest outbound travel market in the world (Wang & Sheldon, 1996;

Xiang et al, 2010), in terms of spending. Chinese tourists made 150 million outbound trips in 2018,

spending a whopping $277 billion in their travels abroad, according to the United Nations World

Trade Organization. The number of Chinese tourists has skyrocketed in recent years. More than 180

million Chinese have passports, compared to about 147 million American passport holders. And when

Chinese travel abroad, they spend big bucks (CNN, 2020) and if the outbreak lasts longer and is more

severe than the 2003 SARS crisis, it could lead to 25 million fewer outbound trips by Chinese

travelers this year. That could wipe out about $73 billion in spending. China’s tourism industry will be

most affected due to the virus since tourism represents 11% of their GDP in recent years, growing in a

steady rate of 7%. The World Tourism Organization and the World Health Organization through a

joint statement have asked the tourism sector that their response to the outbreak of the Corona Virus

be "measured, consistent and proportionate" to the threat posed for public health. Closing borders,

prohibiting travel in general and more extreme government policies will not stop the spread of the

Corona Virus, said the World Travel and Tourism Council (Travel Daily News, 2020).

Figure 2: Percentage point deviation in year‐on‐year growth from the first quarter 2020

Source: Bloomberg Economics (2020)

On the other hand, in China, there is now growing optimism that the epidemic will get under control

by late April. Renowned pulmonologist Zhong Nanshan, head of the team of medical experts at the

National Health Commission of China, has said that his country is confident of having the outbreak of

Corona Virus under control at the end of April, as planned (Travel Daily News, 2020).

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Coronavirus’ outbreak impacts on Italy’s tourism industry.

In Italy, almost 90% percent of hotel and travel agency bookings for March 2020 canceled in Rome

and up to 80% in Sicily (Federazione Italiana del Turismo, 2020). As numerous coronavirus cases in

other European countries are traced back to Italy, travel warnings for eleven more Italian towns that

have been on lockdown have been issued.

Picture 2: The virus can turn in empty one of the most famous squares in the world. In normal conditions St.

Mark’s Square in Venice is a popular place to visit for many hundreds of tourists daily and throughout the

year.

Sourse: Secco, F. (2020)

The impact is also hurting areas of Italy barely touched by the virus. Italy’s tourism federation

announced that damage to the tourism sector is estimated at 200 million for the first quarter of the

year. School trips and conferences across the country were also called off. Lombardy, which includes

Milan, accounts for over half of the cases while Veneto and Emilia-Romagna have 15% and 17%,

respectively. All three regions have closed schools for at least a week. In Veneto and Lombardy,

closures also have hit museums, theatres, cinemas, and most public offices, emptying cities like

Milan, where many companies have permitted office workers to work remotely. Furthermore, the

French community church in Rome, St Louis of the French, was closed its doors to the public as a

precautionary measure after a priest came down with coronavirus. In a lot of Universities of Milan,

professors record their lecture empty classrooms to stream online for the students (Mangiapane,

2020).

Italian authorities have closed schools and universities in Lombardy and northern regions in order to

prevent the spread of the novel coronavirus. Milan's Giuseppe Meazza stadium has been closed. The

Italian Serie A football match between AC Milan and Genoa CFC was postponed. On March, 8 the

government of Italy took the extraordinary step of locking down much of the country’s north,

restricting movement for about a quarter of the Italian population in regions that serve as the country’s

economic engine (The New York Times, 2020). These measures turn stretches of Italy’s wealthy

north, including the economic and cultural capital of Milan and landmark tourist destinations such as

Venice, into quarantined enclaves. The travel bans will prevent the free movement of roughly 16

million people.

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Figure 3: Forecasted impact of coronavirus (COVID-19) on tourist arrivals in Italy in 2020, by region of

destination

Sourse: Statista, (2020a)

Novel coronavirus’ impact on Australian tourism

Coronavirus outbreak continues to severely restrict visitor numbers in Australia. Places such as Gold

Coast (Faulkner, 2002) or Cairns, which are among Australia’s most popular destinations suffer a

visitors reduction up to 90% and an important reason for this, is the fact that these destinations

supported by large numbers of tourists from China, Japan, and South Korea. Most of the hotels

already are advertising rooms’ tariff at half the normal and furthermore heavy discounts are also on

offer in major cities, though city markets are better insulated from the loss of an estimated 150,000

Chinese tourists who would otherwise be in Australia (Chow & Murphy, 2011; Jin et al, 2012).

Australian destinations like Queensland and Cairns (Zhang & Peng, 2014) face a unique risk because

these regions are strongly reliant on the usual stream visitors from Asia (McCoy et al, 2004) who are

coming to see the tropical rainforests are the Great Barrier Reef. Because Cairns is remote, it cannot

pivot as quickly or easily to attract more domestic travelers. It is estimated that the tourism industry in

Cairns, will suffer losses of 100 million Australian dollars by the end of March 2020, and about a loss

of about 1,800 local jobs (The Guardian, 2020). It should also be noted that there are hotels in

bushfire-affected areas (March 2020) that have been losing money for four months in a row.

According to the chief executive of Tourism Accommodation Australia, even though cities like

Sydney are 10% down in terms of room occupancy in February 2020. An Australian economist

McKibbin has warned that Australia’s national economy can be plunged into a recession by the

Covid-19 outbreak (McKibbin & Fernando, 2020), especially in the case that coronavirus goes global

with as much as 8% carved from growth over a year, according to his new modeling. Professor

McKibbin had modeled also the effects of the 2002 SARS outbreak (Lee & McKibbin, 2004).

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The spread of coronavirus and the potential effects on Las Vegas tourism industry

The US authorities dealt a great blow to world tourism, because before the alarm by the Corona Virus

the Administration that presides over Donald Trump appealed to companies and public centers to

avoid travel and large meetings. These measures will no doubt have a large impact on people’s travel

arrangements to one of the most popular leisure destinations in the US in Las Vegas, as authorities

will now seek to limit people’s face-to-face interactions, something that should have a positive knock-

on effect on the ability of online casino and online betting sites worldwide to capitalize on their

shortcomings in the coming weeks (Travel Daily News, 2020).

Even the healthy Las Vegas’s gambling tourism-based economy (Eadington, 1999), that remains

strong for more than half a century is possible to become sick with Coronavirus. As coronavirus tends

to grip the whole planet, government services, authorities, and employers are recommending traveling

less and this advice could be very problematic for the gambling tourism ‘Mecca’. If coronavirus

continues to spread across the globe for a few more months, it could cause significant effects on

visitors, revenue from gaming, taxable sales, and in the hospitality sector’s employment. Already in

the second week of March 2020, health officials of Southern Nevada announced the first coronavirus

case in the State, but airplanes continued to land at McCarran International Airport, where a record 51

million people arrived in 2019 (Reno Gazette Journal, 2020). Since February 2020, ‘Southwest

Airlines’, the largest domestic airline in the U.S.A. (Ren, 2020) has seen a noticeable decline in

bookings, and this decline continues daily.

Generally, in the U.S.A. the impact of coronavirus on travel industry is six or seven times greater than

the 9/11 attacks, according to the president and CEO of the U.S. Travel Association, which

encourages travel to and within the country and represents an industry that generates $2.6 trillion in

economic output and supports 15.8 million jobs in the U.S. (National Geographic, 2020).

Negative effects of Covid-19 on global tourist activities

The World Travel and Tourism Council have warned the COVID-19 pandemic could cut 50 million

jobs worldwide in the travel and tourism industry, and Asia is expected to be the worst affected. When

the outbreak will be over, it could take up to ten months for the industry to recover (World Economic

Forum, 2020). This impact would depend on how long the epidemic lasts and could still be

exacerbated by recent restrictive measures, such as those taken by the U.S. administration on travel to

Europe (World Travels and Tourism Council, 2020). According to chief executive of WTTC, the

coronavirus is a significant threat to the tourism industry that could shrink the travel sector by up to

25% in 2020 (BBC, 2020b)

The news that the virus had spread to Italy and to other countries in Europe has caused considerable

anxiety for tourists, potential tourists and the wider tourism industry. Research from the Global

Business Travel Association (2020) shows widespread business meeting cancellations and

postponements are taking place worldwide. The International Air Transport Association (IATA, 2020)

has predicted that the coronavirus will reduce global airline revenue by $29.3 billion in 2020, arising

from a contraction in global air demand. While this is the first such contraction since the global

financial crisis of 2008 to 2009, it needs to be recognized that virtually 95% of this projected loss will

be for Asia/Pacific carriers.

As the coronavirus spreads almost all over the world with rapid numbers and an increasing number of

cases and deaths, European countries’ tourism economies - and not only - are plunging. Traditional

tourist destinations with constant traffic are at risk of losing up to 90% of their flows. In Ireland there

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are already trip cancellations, according to the chief executive of Tourism Authority. The first patients

were confirmed as having coronavirus. They all have traveled from affected areas in Italy. Worries

grow as cancellations increase and must be noticed that European visitors to the island of Ireland

spend about two billion euros, and it is a serious part of national income (BBC News, 2020). Ireland's

clash with Italy in the Six Nations rugby tournament called off. Main events such as Dublin’s St

Patrick’s festival have been also canceled. Northern Ireland’s tourism industry had been also seriously

affected by the outbreak, as 66% of European visitors to Northern Ireland enter via the Republic of

Ireland. In Greece, since the second week of March, the government ordered the closure of all shops

except supermarkets, pharmacies, fuel stations and bakeries attempting to delay the spread of the

virus. As a result, tourism faces a delay to season (Balkan In Sight, 2020). In Cyprus, airlines already

show the effect and Virgin Atlantic reporting flying near-empty planes. According to the chief of the

Cyprus Hotel Association announced that March was a near wipe-out and had been already written off

and April also seems to be quite muted for reservations (Tornos, 2020). The Russian tourism industry

also, was projected to lose about 100 million U.S. dollars due to the outbreak of coronavirus COVID-

2019 in China in January 2020. According to the Association of Tour Operators of Russia (ATOR),

approximately 45 thousand organized tourists from China were expected to travel to Russia in March

2020. Due to the infection spread, Russia closed its Far Eastern border with China, resulting in

suspension of tours purchased by Chinese travelers (Statista, 2020).

In Egypt also, has been sensed a notable decline in tourists over since February 2020, after the

outbreak of the coronavirus. After the announcement of the first infection of coronavirus in Egypt, and

about 200 cases as of the mid March, many hotel reservations have been canceled and tourists can

barely at tourists sites (Al-Monitor, 2020).

Figure 4: Key figures on the impact of COVID-1) on Russian inbound tourism from China in 2020

Expected loss from suspended tours of Chinese tourists in Q1 2020 (in 1,000 U.S. dollars)

Lost income of Russia tour operators if the tourist flow is notrestored from May to September 2020 (in million Russian rubles)

Lost income of Russian tour operators from February to March 2020 (in million Russian rubles)

Expected number of organized tourists from China per month from Januray to May 2020

Numbers of Chinese tourists whose tours were blocked as Jan. 28, 2020

Number of Chinese tourists in Russia in 2019 (in 1,000s)

Source: Statista (2020b)

In India, in accordance with industry chamber CII, this is the one of the worst crises ever to hit the

Indian tourism industry impacting all its geographical segments - inbound, outbound and domestic,

almost all tourism verticals - leisure, adventure, heritage, MICE, cruise, corporate and niche segments.

The coronavirus pandemic could deal a crippling blow to the Indian travel and tourism industry,

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especially with the government suspending all visas, with the economic impact being assessed to run

into thousands of rupees. The whole tourism value chain across hotels, travel agents, tour operations,

destinations, restaurants, family entertainment venues and air, land and sea transportation have been

hit. In an impact assessment of the coronavirus pandemic, CII Tourism Committee said inbound

foreign tourism of over USD 28 billion in value terms accounts for an average 60-65% between

Octobers to March (The Economic Times, 2020).

Existing of tourism opportunities in drastic times

With few people traveling right now, Thailand’s A-One Hotels Group is employing a new tactic to

attract bookings by rolling out a self-quarantine package at its Bangkok and Pattaya hotels. These full-

board packages are targeted at Thais or residents who wish to isolate themselves for 14 days. Meals

are delivered to the rooms on trolleys, while dishes, cutlery and bed sheets used by guests in self-

isolation will be separated for special handling. A special team will provide daily housekeeping

services and help monitor the conditions of the guests under quarantine. Should any of these guests

become unwell or develop any coronavirus symptoms during their stay at the hotel, they will

immediately be sent to the several hospitals located in the vicinity of the hotel, according to the

company’s director. These packages are priced very competitively with rates slashed by 20% (Skift,

2020). This risky strategy is a first reaction to the challenge that faces the global hospitality industry

(The Wall Street Journal, 2020). This policy seems to be followed by other hotels industry companies

around the world; the Dorsett chain of hotels, for example, is selling two-week or 27-day quarantine

packages at nine locations, according to the Wall Street Journal. Guests must have their temperatures

checked twice daily to see if they’re exhibiting symptoms of the virus, which include fever. They can

order meals through online food delivery services or through the hotel’s concierge.

Some of Hong Kong’s high-end hotels also, are offering similar packages. The Park Lane Hong Kong

has a 14-day package that runs for $2,525 and includes three meals a day. In Singapore, some hotels

are offering reduced rates to people who need to quarantine. The Fairmont Singapore has a two-week

package with a daily rate of about half the hotel’s usual rate (The Real Deal, 2020). At the same time,

Asset World Corp has announced the temporary closure of five hotels in Bangkok from March 26 to

April 15 to reduce the risk of spreading the Covid-19 disease virus. The five hotels being closed are:

Bangkok Marriott Marquis Queen's Park Hotel, DoubleTree by Hilton Sukhumvit Bangkok Hotel, Le

Meridien Bangkok Hotel, The Okura Prestige Hotel Bangkok and the Bangkok Marriott Hotel The

Surawongse (Skift, 2020).

Conclusions

An epidemic can become the ultimate driver of national tourism industry to the collapse, as it affects

all human activities, like social, religious, athletic, artistic and cultural. The Corona Virus has

convulsed the world tourism industry, with large hotel chains and digital platforms such as booking

being forced to cancel reservations in the Asian country. The tourism industry faces an unprecedented

confluence of threats - made up of a global health alarm; the shortage of aircraft due to the crisis of

the Boeing 737 Max; the social demonization of travel; exaggerated and even false media offensives;

climate catastrophes; sector taxes; bankruptcies of operators and airlines; and the political instability

and economic slowdown in the large markets - which hints at least a global contraction for the tourism

business in the near future.

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